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Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month
Zero Hedge Blog ^ | Thursday April 14, 2011 | Tyler Durden

Posted on 04/14/2011 9:15:38 AM PDT by jpl

Could the Chinese monetary tightening be working? The National Bureau of Statistics has released its latest food price update for the period April 1-10, which shows that while most foods continue to rise modestly, several food products have plunged particularly cucumbers and rapes, both falling 8.8%, kidney beans 6.3% and kidney beans down 6.3%. Yet this is nothing compared to what is happening to Chinese real estate: it appears Chanos' long anticipated property bubble may have popped... but the supersonic boom is so loud that nobody has heard it yet.

From Market News:

Prices of new homes in China's capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city's Housing and Urban-Rural Development Commission.

Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.

Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government's crackdown on speculation in the real estate market.

Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December, according to National Bureau of Statistics data.

The central government has launched several rounds of measures since last year designed to cool the housing market, though local government reliance on land sales to plug fiscal holes mean enforcement hasn't been uniform.

The only question is how much actual equity buffer was used in these purchases. For all intents and purposes a drop of this magnitude levered even 2 times (assuming 50% or so equity down) means that China is on the verge of a complete bubble implosion. If the pummelling in the Beijing real estate market shifts to other cities not only is the Chinese tightening regime over, but the SHCOMP in the next few weeks could get very interesting as people understand the world's biggest marginal bubble has popped.


TOPICS: Foreign Affairs; Government; News/Current Events
KEYWORDS: bubble; china; realestate
It's going to be interesting to see what happens on this front going forward.
1 posted on 04/14/2011 9:15:44 AM PDT by jpl
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To: jpl

China is a big zit ready to pop.


2 posted on 04/14/2011 9:18:32 AM PDT by Armaggedon
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To: jpl
Contagion anyone?
3 posted on 04/14/2011 9:19:13 AM PDT by Sleeping Freeper
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To: jpl
Let me. DEFLATION.

Empty cities, empty malls, finally the market has caught on and prices for real estate in China are falling.

That means less demand for the commodities that are used to build housing. Copper, steel, cement. Once copper starts to fall, other commodities will follow including gold and silver. Buckle up boys, it will be a bumpy ride ahead.

4 posted on 04/14/2011 9:25:17 AM PDT by Former Proud Canadian (How do I change my screen name now that we have the most conservative government in the world?)
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To: jpl
"Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month"

In the words of Biden "This is Fu__ing Big" and not a word in the media. How much American debit can the Chinese buy if they are propping up their own economy?

5 posted on 04/14/2011 9:26:34 AM PDT by 2001convSVT (That Beck guy was right about gold, too.)
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To: jpl

Obama is trying to beat that 27% by pulling the rug out from under the mortgage interest deduction.


6 posted on 04/14/2011 9:34:30 AM PDT by AZLiberty (Yes, Mr. Lennon, I do want a revolution.)
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To: 2001convSVT

China pretty muched stopped buying US debt. Japan will cut back too. James Chanos has been saying China is a bubble that will burst. Chanos was the (hedge fund short) that caught on to Enron’s scam. One of the few hedge fund guys that really impresses me. The only hedge fund short who is probably not a weasel.

The web siet muddy waters or something has been nailing all the scammy Chinese reverse merger stock scams.


7 posted on 04/14/2011 9:42:08 AM PDT by Frantzie (HD TV - Total Brain-washing now in High Def. 3-D Coming soon)
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To: Armaggedon

BIG TIME. I’m looking very forward to it. You can only build so many ghost cities to keep GDP up before everything comes crashing down.


8 posted on 04/14/2011 9:45:59 AM PDT by Peter from Rutland
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To: AZLiberty

Keep watching TV cause ALL of TV and Hollywood plus the media support Obama. Your viewership insures your slavery.


9 posted on 04/14/2011 9:49:07 AM PDT by Frantzie (HD TV - Total Brain-washing now in High Def. 3-D Coming soon)
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To: Peter from Rutland

They actually have people they can move into the ghost cities but the people cannot afford the housing.


10 posted on 04/14/2011 9:53:34 AM PDT by Frantzie (HD TV - Total Brain-washing now in High Def. 3-D Coming soon)
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To: jpl
Uh-oh! Socialistic policies didn't work in China, the same way it doesn't work here, oh well, good try Communist China, good try.



11 posted on 04/14/2011 10:26:45 AM PDT by KC_Lion (America is on the Brink of War with itself, and no one seems to notice or care.)
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To: jpl

But they look so strong.


12 posted on 04/14/2011 10:36:46 AM PDT by lurk
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To: Stillwaters
Something to keep an eye on...

Empty cities, empty malls, finally the market has caught on and prices for real estate in China are falling.

That means less demand for the commodities that are used to build housing. Copper, steel, cement. Once copper starts to fall, other commodities will follow including gold and silver. Buckle up boys, it will be a bumpy ride ahead.

13 posted on 04/14/2011 4:27:27 PM PDT by lonevoice (Where the Welfare State is on the march, the Police State is not far behind)
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